AbitibiBowater to Invest in its Iroquois Falls Paper Mill

Friday, August 26, 2011

Press release from the issuing company

MONTREAL, - AbitibiBowater today announced a reconfiguration and capital spending program for its paper mill located in Iroquois Falls, Ontario. The investments will improve overall product quality and the mill's competitive position.

The Company will be investing between C$12-$17 million in the thermo-mechanical pulp mill and on paper machine number 8, the larger of the mill's two machines. The pulp mill investment will result in improved pulp quality with the installation of additional pulp cleaning. Paper machine upgrades will result in improved wet-end formation and newsprint quality. As well, chip receiving and chip handling capabilities will be increased to allow the Iroquois Falls facility to operate on 100% externally supplied chips, with the mill's current woodyard and woodroom being phased out.

"Today's announcement is a critical step in improving the competitive position of our Iroquois Falls operation for the foreseeable future," said Michel Maillé, Vice President, Pulp and Paper Operations. "While it has been a good site over the years, this investment is necessary to meet today's market and economic realities."

The reconfiguration follows consultation with both the Town of Iroquois Falls and the employees at the mill and their union representatives.

The increase in chip receiving and handling capability and the closure of the woodroom and wood yard will occur during the first half of 2012. The reconfiguration will result in a workforce reduction of approximately 60 positions, although the Company hopes the mill demographics will significantly reduce the number of employees who will be laid off given retirement eligibility over the next couple of years. The pulp mill and paper machine investments will be made over the next 12 to 18 months.

"In addition to improving mill economics, the conversion to 100% externally supplied chips will also provide an outlet for chip residuals from sawmills on the Highway 11 corridor. This will be particularly important as markets for Ontario lumber recover," added Maillé.

"The investments announced today are consistent with AbitibiBowater's overall strategy of achieving greater efficiency in its existing mills and building on proven competencies," stated Richard Garneau, President and Chief Executive Officer. "Newsprint remains an important component of our business. While market and economic conditions remain challenging, the Company will invest where there is a good resource base, a strong workforce and a receptive investment climate. The investments announced today reflect our view that the Iroquois Falls mill and its employees are worthy of our confidence and that Ontario is a good place to invest."

AbitibiBowater and other member companies of the Forest Products Association of Canada, as well as a number of environmental organizations, are partners in the Canadian Boreal Forest Agreement. The group works to identify solutions to conservation issues that meet the goal of balancing the three pillars of sustainability linked to human activities: economic, social and environmental.

AbitibiBowater is a global leader in the forest products industry, producing a diverse range of products, including newsprint, commercial printing papers, market pulp and wood products. The Company owns or operates 18 pulp and paper mills and 24 wood products facilities located in the United States, Canada and South Korea. Marketing its products in close to 90 countries, AbitibiBowater also has third-party certified 100% of its managed woodlands to sustainable forest management standards. The Company's shares trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange.